What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-08 compared with 2023-08-09 · 254 added, 233 removed, 783 unchanged (38% of the section changed)

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• increases in costs of compliance with, or liability for violation of, existing or future laws, regulations and other requirements;

• societal, legislative and regulatory measures to address climate change and greenhouse gases emissions;

• societal, legislative and regulatory measures to address climate change and greenhouse gases emissions ("GHG");

• our ability to execute our sustainability improvement plans, including greenhouse gas reduction targets;

• acts of terrorism (including cyber-terrorism) aimed at either our facilities or other facilities;

• impacts of global conflicts such as the Russia-Ukraine War;

• future decisions by the Organization of Petroleum Exporting Countries ("OPEC") and the members of other leading oil producing countries

(together with OPEC, “OPEC+”) regarding production and pricing and disputes between OPEC+ members regarding the same;

• impacts of global conflicts such as the war between Israel and Hamas (the "Israel-Hamas War") and the Russia-Ukraine War;

• future decisions by the Organization of Petroleum Exporting Countries ("OPEC") and the members of other leading oil producing countries (together with OPEC, “OPEC+”) regarding production and pricing and disputes between OPEC+ members regarding the same;

• disruption, failure, or cybersecurity breaches affecting or targeting our IT systems and controls, our infrastructure, or the infrastructure of our cloud-based IT service providers;

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We continue to identify opportunities to mitigate market risk and focus on efforts that improve our overall cost structure while not compromising operational excellence.

Although crack spreads were lower than the historic highs in the second quarter of 2022, refining margins remain strong and demand for refined products has been robust driven by the continued constrained supply in the markets we serve.

During the second quarter 2023, we experienced reduced throughputs at our refineries as a result of unplanned downtime including a catalyst change at our Big Spring refinery requiring additional operating and capital expenditures and weather related operational disruptions at our El Dorado refinery, partially offset by improved throughputs at our Tyler refinery as a result of turnaround activities completed in the first quarter 2023.

The favorable domestic crack spreads and increased U.S.

export demand has encouraged expansion in domestic refining capacity.

The domestic WTI differentials compared to Brent continued to be favorable during the second quarter of 2023, while the WTI Midland differential to Cushing remained relatively flat coming off the first quarter 2023.

Additionally, our integration of Delek Delaware Gathering (formally 3 Bear) has expanded our existing crude oil gathering throughput capacity in the Permian while also extending our product offering to include natural gas gathering and processing as well as wastewater recycling and disposal.

Although average crack spreads were lower than the third quarter of 2022, refining margins remain strong and demand for refined products has been robust despite a rise in crude oil prices driven by the continued constrained supply in the markets we serve.

During the third quarter 2023, given the strong refining margins, we made a strategic decision to optimize our inventory levels to reduce carrying costs and improve working capital efficiency.

As a result of the decreased inventory levels, we had to rebalance our hedging positions which resulted in realizing hedging positions that were in loss positions due to the increased price environment.

We will continue to identify opportunities for operational efficiency improvements.

The domestic West Texas Intermediate ("WTI") differentials compared to Brent continued to be favorable during the third quarter of 2023, while the WTI Midland differential to Cushing premium increased compared to the second quarter 2023.

Further impacting the favorability of our current quarter results were record refinery throughput rates driven by safe and reliable operations.

Additionally, our logistics segment contributed strong results and our integration of Delek Delaware Gathering (formally 3 Bear) has expanded our existing crude oil gathering throughput capacity in the Permian while also extending our product offering to include natural gas gathering and processing as well as wastewater recycling and disposal.

Our retail operations have benefited from seasonal demand from U.S.

drivers and present several high-growth opportunities for future investment which will complement our existing operations and build brand equity.

Although the near term economic outlook appears favorable, we are positioning the Company for potential economic headwinds that coincide with a potential global downturn in the economy.

drivers and present several high-growth opportunities to capitalize on growing consumer demand for convenient and accessible fueling options which will complement our existing operations and build brand equity.

In September 2023, we opened a new-to-industry retail location in Tyler, TX.

Our first store in this market, which features expanded food service and leading digital technology.

The near term economic outlook is uncertain, and as a result we continue to position the Company for potential economic headwinds that coincide with a potential global downturn in the economy.

We continue to progress our business transformation focused on enterprise-wide opportunities to improve the efficiency of our cost structure.

The expectation of reduction in the reliance of liquid fuels, a tightening of capital markets, increased regulatory pressures, and volatility in the commodity markets, are considerations that Delek must balance as we move forward with our strategic initiatives.

The energy-related legislation passed with the Inflation Reduction Act ("IRA") encompasses clean energy financial incentives that are expected to increase capital investment opportunities that focus on the development of production capacity for liquid fuels with lower greenhouse gas emissions ("GHG").

Gulf coast industries should be well positioned for growth, particularly if global trade becomes tied to environmental attributes.

Our focus on reduction of greenhouse gas emissions is a key objective as we strive to be a leader in the transition to a carbon neutral future.

Delek formed the Sustainable Operations Team ("SOT") in 2022 which is led by our EVP, Operations.

Our focus on reduction of GHG is a key objective as we strive to be a leader in the transition to a carbon neutral future.

Delek formed the Sustainable Operations Team ("SOT") in 2022 which is led by our Executive Vice President, Operations.

The SOT will coordinate execution of our sustainability improvement plans (beginning with GHG reduction targets) ensuring enterprise strategies, business unit operations, capital spending plans, supply chain and personnel pipeline are in alignment and operating as needed to meet established goals.

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The refining segment (or "Refining") processes crude oil and other feedstocks for the manufacture of transportation motor fuels, including various grades of gasoline, diesel fuel, aviation fuel, asphalt and other petroleum-based products that are distributed through owned and third-party product terminals.

The refining segment has a combined nameplate capacity of 302,000 bpd as of June 30, 2023.

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of September 30, 2023.

A high-level summary of the refinery activities is presented below:

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Gulf Coast ("Gulf Coast") 5-3-2 crack spread because we believe it to be the most closely aligned benchmark.

(2) Our Big Spring refinery is capable of processing substantial volumes of sour crude oil, which has historically cost less than intermediate, and/or substantial volumes of sweet crude oil, and therefore the West Texas Intermediate ("WTI") Cushing/ West Texas Sour ("WTS") price differential, taking into account differences in production yield, is an important measure for helping us make strategic, market-respondent production decisions.

(2) Our Big Spring refinery is capable of processing substantial volumes of sour crude oil, which has historically cost less than intermediate, and/or substantial volumes of sweet crude oil, and therefore the WTI Cushing/ West Texas Sour ("WTS") price differential, taking into account differences in production yield, is an important measure for helping us make strategic, market-respondent production decisions.

(3) The Krotz Springs refinery has the capability to process substantial volumes of light sweet crude oil to produce a high percentage of refined light products.

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It is comprised of the consolidated balance sheet and results of operations of Delek Logistics (NYSE:

DKL), where we owned a 78.7% interest at June 30, 2023.

DKL), where we owned a 78.7% interest at September 30, 2023.

Delek Logistics was formed by Delek in 2012 to own, operate, acquire and construct crude oil and refined products logistics and marketing assets.

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Retail Overview

Our retail segment (or "Retail") at June 30, 2023 includes the operations of 247 owned and leased convenience store sites located primarily in West Texas and New Mexico.

Our retail segment (or "Retail") at September 30, 2023 includes the operations of 250 owned and leased convenience store sites located primarily in West Texas and New Mexico.

Our convenience stores typically offer various grades of gasoline and diesel under the DK or Alon brand name and food products, food service, tobacco products, non-alcoholic and alcoholic beverages, general merchandise as well as money orders to the public, primarily under the 7-Eleven and DK or Alon brand names pursuant to a license agreement with 7-Eleven, Inc.

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Merchandise at our convenience store sites will continue to be sold under the 7-Eleven brand name until 7-Eleven branding is removed pursuant to the termination.

As of June 30, 2023, we have removed the 7-Eleven brand name at 145 of our store locations.

As of September 30, 2023, we have removed the 7-Eleven brand name at 180 of our store locations.

Substantially all of the motor fuel sold through our retail segment is supplied by our Big Spring refinery, which is transferred to the retail segment at prices substantially determined by reference to published commodity pricing information.

Corporate and Other Overview

Our corporate activities, results of certain immaterial operating segments, and intercompany eliminations are reported in 'corporate, other and eliminations' in our segment disclosures.

Additionally, our corporate activities include certain of our commodity and other hedging activities.

Our corporate activities, results of certain immaterial operating segments, and intercompany eliminations are reported in 'corporate, other and

Management's Discussion and Analysis

eliminations' in our segment disclosures.

Additionally, our corporate activities include certain of our commodity and other hedging activities.

Strategic Overview

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Automate processes and shift operational roles to higher value-added activities.

Shareholder Returns

Financial Flexibility & Shareholder Returns

We believe shareholder value is strengthened through, among other things, a stable dividend complemented by share repurchases and debt reductions.

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2023 Strategic Developments

Safe & Reliable Operations Shareholder Returns Long Term Sustainable Business Model

Safe & Reliable Operations Financial Flexibility & Shareholder Returns Long Term Sustainable Business Model

Improving Discipline Around Outage Spend and Optimizing Downtime:

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We have taken steps to improve the efficiency of our cost structure and to align with our strategic priorities to drive cost efficiencies, which include cost reductions in general and administrative expenses.

We are targeting $100 million run-rate cost reduction in 2024.

Reducing Debt to Provide Shareholder Value:

During the six months ended June 30, 2023, we reduced our long-term obligations by approximately $246.7 million.

During the nine months ended September 30, 2023, we reduced our long-term obligations by approximately $422.4 million.

Focus on Leadership:

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Reilly has over 20-years of energy oil refining and trading experience.

In April 2023, Tommy Chavez was named Senior Vice President, Refining Operations.

Chavez brings over three decades of refining experience.

In April 2023, Tommy Chavez who has over three decades of refining experience was named Senior Vice President, Refining Operations.

Improving Safety Through a Safety Action Plan:

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Increasing Shareholder Value through Payment of Dividends:

We maintained our quarterly cash dividend including the quarterly cash dividend of $0.235 per share of our common stock which was declared by our Board of Directors on August 4, 2023 and payable on August 21, 2023.

In addition, a cash dividend of $0.23 per share of our common stock was paid on May 22, 2023.

We increased our quarterly cash dividend to $0.240 per share of our common stock which was declared by our Board of Directors on November 1, 2023 and payable on November 20, 2023.

In addition, a cash dividend of $0.230 per share of our common stock was paid on May 22, 2023 and a cash dividend of $0.235 per share of our common stock was paid on August 21, 2023.

Increasing Shareholder Value through Share Repurchases:

During the three months ended months ended June 30, 2023, 1,795,335 shares of our common stock were repurchased for a total of $40.0 million .

Subsequent to June 30, 2023, 981,690 shares of our common stock were repurchased for a total of $25.0 million .

During the three and nine months ended September 30, 2023, 981,690 and 2,793,317 shares of our common stock were repurchased for a total of $25.0 million and $65.4 million, respectively.

Subsequent to September 30, 2023, 769,450 shares of our common stock were repurchased for a total of $20.0 million .

Executing Retail Growth Plans:

In September 2023, we opened a new-to-industry retail location in Tyler, TX.

Our first store in this market, which features expanded food serviced and leading digital technology.

Market Trends

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Market Outlook for the Remainder of 2023

We have positioned the Company to continue to run safely, reliably and environmentally responsibly at near nameplate capacity while leveraging our new Delek Delaware Gathering lines of business with an eye towards the One Delek vision.

We have positioned the Company to continue to run safely, reliably and environmentally responsibly at near or above nameplate capacity while leveraging our new Delek Delaware Gathering lines of business with an eye towards the One Delek vision.

Many uncertainties remain with respect to the global supply and demand of the crude oil and refined products markets and it is difficult to predict the ultimate economic impacts this may have on our operations.

We expect gasoline and diesel demand to continue to follow typical seasonal patterns resulting from the summer driving season.

Gasoline and diesel demand have returned to pre-pandemic levels and we expect gasoline and diesel demand to continue to follow typical seasonal patterns after the summer driving season.

Crude oil and refined product supply continues to be restricted and should support the continued increased utilization of refining capacity which we expect to result in continued strong market conditions in downstream refining.

Management's Discussion and Analysis

See below for further discussion on how certain key market trends impact our operating results.

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We manage market price risk on crude oil through financial derivative hedges, in accordance with our risk management strategies.

The table below reflects the quarterly average prices of WTI Midland and WTI Cushing crude oil for each of the quarterly periods in 2022 and for the two quarterly periods in 2023.

The table below reflects the quarterly average prices of WTI Midland and WTI Cushing crude oil for each of the quarterly periods in 2022 and for the three quarterly periods in 2023.

Crude Pricing Differentials

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Conversely, as these price discounts widen, so does our competitive advantage, created specifically by our access to WTI Midland crude sourced through our gathering systems.

The chart below illustrates the key differentials impacting our refining operations, including WTI Cushing to Brent, WTI Midland to WTI Cushing, and Louisiana Light Sweet crude oil ("LLS") to WTI Cushing for each of the quarterly periods in 2022 and for the two quarterly periods in 2023.

Management's Discussion and Analysis

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High Sulfur Diesel ("HSD") and U.S.

Ultra Low Sulfur Diesel ("ULSD") for each of the quarterly periods in 2022 and for the two quarterly periods in 2023.

Ultra Low Sulfur Diesel ("ULSD") for each of the quarterly periods in 2022 and for the three quarterly periods in 2023.

Crack Spreads

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Generally, a crack spread represents the approximate refining margin resulting from processing one barrel of crude oil into its outputs, generally gasoline and diesel fuel.

The table below reflects the quarterly average Gulf Coast 5-3-2 ULSD, 3-2-1 ULSD and 2-1-1 HSD/LLS crack spreads for each of the quarterly periods in 2022 and for the two quarterly periods in 2023.

The table below reflects the quarterly average Gulf Coast 5-3-2 ULSD, 3-2-1 ULSD and 2-1-1 HSD/LLS crack spreads for each of the quarterly periods in 2022 and for the three quarterly periods in 2023.

Management's Discussion and Analysis

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Environmental regulations and the political environment continue to affect our refining margins in the form of volatility in the price of RINs .

We enter into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs of our credits for commitments required by the EPA to blend biofuels into fuel products ("RINs Obligation").

We enter into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs of our credits for commitments required by the U.S.

Environmental Protection Agency (“EPA”) to blend biofuels into fuel products ("RINs Obligation").

On a consolidated basis, we work to balance our RINs Obligation in order to minimize the effect of RINs prices on our results.

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Because of the volatility in RINs prices, it is not possible to predict future RINs cost with certainty, and movements in RINs prices can have significant and unanticipated adverse effects on our refining margins that are outside of our control.

The chart below illustrates the volatility in RINs for each of the quarterly periods in 2022 and for the two quarterly periods in 2023.

The chart below illustrates the volatility in RINs for each of the quarterly periods in 2022 and for the three quarterly periods in 2023.

Energy costs are a significant element of our Refining EBITDA and can significantly impact our ability to capture crack spreads, with natural gas representing the largest component.

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We manage our risk around natural gas prices by entering into variable and fixed-price supply contracts in both the Gulf and Permian Basin or by entering into derivative hedges based on forecasted consumption and forward curve prices, as appropriate, in accordance with our risk policy.

The chart below illustrates the quarterly average prices of Waha (Permian Basin) and Henry Hub (Gulf Coast) per million British Thermal Units ("MMBtu") for each of the quarterly periods in 2022 and for the two quarterly periods in 2023.

Management's Discussion and Analysis

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GAAP measure, net income attributable to Delek:

Reconciliation of segment EBITDA to net (loss) income attributable to Delek (in millions)

Three Months Ended June 30, Six Months Ended June 30,

Reconciliation of segment EBITDA to net income attributable to Delek (in millions)

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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Interest expense, net (82.3) (50.7) (239.2) (132.7)

Income tax benefit (expense) 3.8 (100.4) (12.0) (103.5)

Income tax expense (31.5) (4.0) (43.5) (107.5)

Depreciation and amortization (91.3) (72.9) (264.1) (209.2)

Net (loss) income attributable to Delek $ (8.3) $ 361.8 $ 56.0 $ 368.4

Net income attributable to Delek $ 128.7 $ 7.4 $ 184.7 $ 375.8

The following table provides a reconciliation of refining margin to the most directly comparable U.S.

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Refining Segment

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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Summary Statement of Operations Data (1)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 (2)

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Total non-operating expenses, net 57.1 32.2 167.3 85.3

(Loss) income before income tax (benefit) expense (5.3) 469.0 82.7 486.9

Income tax (benefit) expense (3.8) 100.4 12.0 103.5

Net (loss) income (1.5) 368.6 70.7 383.4

Income before income tax expense 167.6 20.8 250.3 507.7

Income tax expense 31.5 4.0 43.5 107.5

Net income 136.1 16.8 206.8 400.2

Net income attributed to non-controlling interests 7.4 9.4 22.1 24.4

Net (loss) income attributable to Delek $ (8.3) $ 361.8 $ 56.0 $ 368.4

Net income attributable to Delek $ 128.7 $ 7.4 $ 184.7 $ 375.8

(1) This information is presented at a summary level for your reference.

See the Condensed Consolidated Statements of Income in Item 1.

to this Quarterly Report on Form 10-Q for more detail regarding our results of operations and net income (loss) per share.

to this Quarterly Report on Form 10-Q for more detail regarding our results of operations and net income per share.

(2) In the first quarter 2023, we reassessed the classification of certain expenses and made certain reclassification adjustments to better represent the nature of those expenses.

Accordingly, we have made reclassifications to the prior period in order to conform to this revised current period classification, which resulted in a decrease in the prior period general and administrative expenses and an increase in the prior period operating expenses of approximately $4.2 million and $7.1 million for the three and six months ended June 30, 2022.

Accordingly, we have made reclassifications to the prior period in order to conform to this revised current period classification, which resulted in a decrease in the prior period general and administrative expenses and an increase in the prior period operating expenses of approximately $3.1 million and $10.2 million for the three and nine months ended September 30, 2022.

We report operating results in three reportable segments:

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Results of Operations

Consolidated Results of Operations — Comparison of the Three and Six Months Ended June 30, 2023 versus the Three and Six Months Ended June 30, 2022.

Net Income (Loss)

Consolidated net loss for the second quarter of 2023 was $1.5 million compared to net income of $368.6 million for the second quarter of 2022.

Consolidated net loss attributable to Delek for the second quarter of June 30, 2023 was $8.3 million, or $(0.13) per basic share, compared to a net income of $361.8 million, or $5.11 per basic share, for the second quarter 2022.

Consolidated Results of Operations — Comparison of the Three and Nine Months Ended September 30, 2023 versus the Three and Nine Months Ended September 30, 2022

Consolidated net income for the third quarter of 2023 was $136.1 million compared to net income of $16.8 million for the third quarter of 2022.

Consolidated net income attributable to Delek for the third quarter of September 30, 2023 was $128.7 million, or $1.98 per basic share, compared to a net income of $7.4 million, or $0.11 per basic share, for the third quarter 2022.

Explanations for significant drivers impacting net income as compared to the comparable period of the prior year are discussed in the sections below.

Management's Discussion and Analysis

Consolidated net income for the six months ended June 30, 2023 was $70.7 million compared to a net income of $383.4 million for the six months ended June 30, 2022.

Consolidated net income attributable to Delek for the six months ended June 30, 2023 was $56.0 million, or $0.84 per basic share, compared to income of $368.4 million, or $5.12 per basic share, for the six months ended June 30, 2022.

Consolidated net income for the nine months ended September 30, 2023 was $206.8 million compared to a net income of $400.2 million for the nine months ended September 30, 2022.

Consolidated net income attributable to Delek for the nine months ended September 30, 2023 was $184.7 million, or $2.80 per basic share, compared to income of $375.8 million, or $5.26 per basic share, for the nine months ended September 30, 2022.

Explanations for significant drivers impacting net income as compared to the comparable period of the prior year are discussed in the sections below.

In the second quarter of 2023 and 2022, we generated net revenues of $4,195.6 million and $5,982.6 million, respectively, a decrease of $1,787.0 million, or 29.9%.

In the third quarter of 2023 and 2022, we generated net revenues of $4,748.4 million and $5,324.9 million, respectively, a decrease of $576.5 million, or 10.8%.

The decrease in net revenues was primarily driven by the following factors:

• in our refining segment, decreases in the average price of U.S.

Gulf Coast gasoline of 31.1%, ULSD of 40.2%, and HSD of 57.4%;

• in our logistics segment, decreases in the average volumes of gasoline and diesel sold and in the average sales price per gallon of diesel and gasoline sold in our West Texas marketing operations, partially offset by increased volumes from the Midland Gathering operations and incremental revenues from the Delaware Gathering Acquisition;

• in our retail segment, a decrease in total fuel sales primarily attributable to a decrease of $1.06 in average price charged per gallon sold, partially offset by an increase in merchandise sales primarily driven by the same-store sales increase of 0.1%.

We generated net revenues of $8,119.9 million and $10,441.7 million during the six months ended June 30, 2023 and 2022, respectively, a decrease of $2,321.8 million, or 22.2%.

Gulf Coast gasoline of 2.5%, ULSD of 14.9%, and HSD of 28.7%, partially offset by an increase in sales volume (including purchased product);

• in our logistics segment, decreases in the average volumes of gasoline sold and in the average sales price per gallon of diesel and gasoline sold in our West Texas marketing operations, partially offset by increased volumes from the Midland Gathering operations and Delaware Gathering operations;

• in our retail segment, a decrease in total fuel sales primarily attributable to a decrease of $0.24 in average price charged per gallon sold and a decrease in merchandise sales primarily driven by the same-store sales decrease of 1.9%.

We generated net revenues of $12,868.3 million and $15,766.6 million during the nine months ended September 30, 2023 and 2022, respectively, a decrease of $2,898.3 million, or 18.4%.

The decrease in net revenues was primarily due to the following:

• in our refining segment, decreases in volume sold and decreases in the average price of U.S.

Gulf Coast gasoline of 22.5%, ULSD of 25.0%, and HSD of 44.7% and decreases in wholesale activity;

• in our refining segment, decreases in the average price of U.S.

Gulf Coast gasoline of 16.4%, ULSD of 21.5%, and HSD of 39.6% and decreases in wholesale activity, partially offset by an increase in sales volume (including purchased product);

• in our retail segment, a decrease in total fuel sales primarily attributable to a $0.53 decrease in average price charged per gallon sold, partially offset by an increase in merchandise sales primarily driven by the same-store sales increase of 1.1%;

These decreases were partially offset by the following:

• in our logistics segment, increased volumes from the Midland Gathering operations and incremental revenues from the Delaware Gathering Acquisition, partially offset by decreases in the average volumes of diesel and gasoline sold and in the average sales price per gallon of diesel and gasoline sold in our West Texas marketing operations.

• in our logistics segment, increased volumes from the Midland Gathering operations and incremental revenues from the Delaware Gathering Acquisition, partially offset by decreases in the average volumes of diesel sold and in the average sales price per gallon of diesel and gasoline sold in our West Texas marketing operations.

Total Operating Costs and Expenses

Cost of Materials and Other

Cost of materials and other was $3,766.6 million for the second quarter of 2023 compared to $5,082.6 million for the second quarter of 2022, a decrease of $1,316.0 million, or 25.9%.

Cost of materials and other was $4,122.1 million for the third quarter of 2023 compared to $4,916.0 million for the third quarter of 2022, a decrease of $793.9 million, or 16.1%.

The net decrease in cost of materials and other was primarily driven by the following:

• decreases in cost of crude oil feedstocks at the refineries, including a 32.3% decrease in the average cost of WTI Cushing crude oil and a 32.2% decrease in the average cost of WTI Midland crude oil;

• decreases in the average volumes sold and average cost per gallon of gasoline and diesel sold in our logistics segment;

• a decrease in retail cost of materials and other due to 26.9% decrease in average cost per gallon sold applied to higher fuel sales volumes.

Cost of materials and other was $7,206.2 million for the six months ended June 30, 2023, compared to $9,235.1 million for six months ended June 30, 2022, a decrease of $2,028.9 million, or 22.0%.

• decreases in cost of crude oil feedstocks at the refineries, including a 10.0% decreases in the average cost of WTI Cushing crude oil and a 10.2% decrease in the average cost of WTI Midland crude oil;

• decreases in the average diesel volumes sold and average cost per gallon of gasoline and diesel sold in our logistics segment;

• a decrease in retail cost of materials and other due to 9.0% decrease in average cost per gallon sold applied to lower fuel sales volumes.

Cost of materials and other was $11,328.3 million for the nine months ended September 30, 2023, compared to $14,151.1 million for nine months ended September 30, 2022, a decrease of $2,822.8 million, or 19.9%.

The net decrease in cost of materials and other primarily related to the following:

• a decrease in the cost of crude oil feedstocks at the refineries, including a 21.5% decrease in the average cost of WTI Cushing crude oil and a 21.3% decrease in the average cost of WTI Midland crude oil and decreased wholesale activity;

• decreases in the average volumes sold and average cost per gallon of gasoline and diesel sold, partially offset by incremental cost of materials and other from the Delaware Gathering Acquisition in our logistics segment;

• a decrease in retail cost of materials and other due to 18.5% decrease in average cost per gallon sold applied to higher fuel sales volumes.

• decreases in the average diesel volumes sold and average cost per gallon of gasoline and diesel sold, partially offset by incremental cost of materials and other from the Delaware Gathering Acquisition in our logistics segment;

• a decrease in retail cost of materials and other due to 15.4% decrease in average cost per gallon sold applied to lower fuel sales volumes.

Management's Discussion and Analysis

Operating Expenses

Operating expenses (included in both cost of sales and other operating expenses) were $219.8 million for the second quarter of 2023 compared to $226.7 million for the second quarter of 2022, a decrease of $6.9 million, or 3.0%.

The decrease in operating expenses was primarily driven by the following:

• lower natural gas prices in 2023.

These decreases were partially offset by the following:

Operating expenses (included in both cost of sales and other operating expenses) were $240.4 million for the third quarter of 2023 compared to $229.5 million for the third quarter of 2022, an increase of $10.9 million, or 4.7%.

The increase in operating expenses was primarily driven by the following:

• an increase in maintenance costs including costs related to our Safety Action Plan, which we expect will continue at least through the end of 2023;

Operating expenses (included in both cost of sales and other operating expenses) were $417.6 million for the six months ended June 30, 2023 compared to $396.5 million in six months ended June 30, 2022, an increase of $21.1 million, or 5.3%.

• an additional $8.0 million expense for uncovered litigation, claims and assessments associated with the 2021 El Dorado refinery fire.

These increases were partially offset by the following:

• lower natural gas prices in 2023.

Operating expenses (included in both cost of sales and other operating expenses) were $658.0 million for the nine months ended September 30, 2023 compared to $626.0 million in nine months ended September 30, 2022, an increase of $32.0 million, or 5.1%.

The increase in operating expenses was primarily driven by the following:

• an increase in maintenance costs including costs related to our Safety Action Plan, which we expect will continue at least through the end of 2023;

• an additional $8.0 million expense for uncovered litigation, claims and assessments associated with the 2021 El Dorado refinery fire;

• an increase in employee costs.

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General and Administrative Expenses

General and administrative expenses were $75.8 million for the second quarter of 2023 compared to $122.3 million for the second quarter of 2022, a decrease of $46.5 million, or 38.0%.

The decrease was primarily driven by a decrease in employee costs including incentive compensation costs and no transactions costs related to the Delaware Gathering Acquisition in the 2023 period.

General and administrative expenses were $147.3 million for the six months ended June 30, 2023 compared to $172.5 million in six months ended June 30, 2022, a decrease of $25.2 million, or 14.6%.

The decrease was primarily driven by a decrease in employee costs including incentive compensation costs and no transactions costs related to the Delaware Gathering Acquisition in the 2023 period.

General and administrative expenses were $72.0 million for the third quarter of 2023 compared to $59.3 million for the third quarter of 2022, an increase of $12.7 million, or 21.4%.

The increase was primarily driven by an increase in employee costs including incentive compensation costs and restructuring costs, partially offset by no transaction costs related to the Delaware Gathering Acquisition in the 2023 period.

General and administrative expenses were $219.3 million for the nine months ended September 30, 2023 compared to $231.8 million in nine months ended September 30, 2022, a decrease of $12.5 million, or 5.4%.

The decrease was primarily driven by a decrease in employee costs including incentive compensation costs and no transaction costs related to the Delaware Gathering Acquisition in the 2023 period, partially offset by restructuring costs.

Depreciation and Amortization

Depreciation and amortization (included in both cost of sales and other operating expenses) was $89.4 million for the second quarter of 2023 compared to $68.0 million for the second quarter of 2022, an increase of $21.4 million, or 31.5%.

Depreciation and amortization (included in both cost of sales and other operating expenses) was $91.3 million for the third quarter of 2023 compared to $72.9 million for the third quarter of 2022, an increase of $18.4 million, or 25.2%.

The increase was a result of a general increase in our fixed asset base due to capital projects and turnarounds completed since the first quarter of 2022.

Depreciation and amortization (included in both cost of sales and other operating expenses) was $264.1 million and $209.2 million for the nine months ended September 30, 2023 and 2022, respectively, an increase of $54.9 million, or 26.2%.

The increase was a result of a general increase in our fixed asset base due to capital projects and turnarounds completed since the first quarter of 2022 and depreciation and amortization attributable to the Delaware Gathering Acquisition.

Depreciation and amortization (included in both cost of sales and other operating expenses) was $172.8 million and $136.3 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $36.5 million, or 26.8%.

The increase was a result of a general increase in our fixed asset base due to capital projects and turnarounds completed since the first quarter of 2022 and amortization attributable to the Delaware Gathering Acquisition.

Other Operating Income, Net

Other operating income, net decreased by $4.2 million in the second quarter of 2023 to $6.1 million compared to $10.3 million in the second quarter of 2022.

The decrease was primarily due to a $3.9 million decrease in insurance recoveries related to the fire and freeze events that occurred during the first quarter 2021.

Other operating income, net decreased by $3.7 million in the third quarter of 2023 to $2.1 million compared to $5.8 million in the third quarter of 2022.

The decrease was primarily due to a $5.1 million decrease in insurance recoveries related to the fire and freeze events that occurred during the first quarter 2021 and fire event that occurred in the fourth quarter 2022.

Management's Discussion and Analysis

Other operating income, net was $16.9 million and $38.7 million for the six months ended June 30, 2023 and 2022, respectively, a decrease of $21.8 million, primarily due to an $8.8 million decrease in insurance recoveries related to the fire and freeze events that occurred during the first quarter 2021 and decreased hedge gains realized in 2023 compared to 2022 associated with our trading derivatives.

Other operating income, net was $19.0 million and $44.5 million for the nine months ended September 30, 2023 and 2022, respectively, a decrease of $25.5 million, primarily due to a $13.9 million decrease in insurance recoveries related to the fire and freeze events that occurred during the first quarter 2021 and fire event that occurred in the fourth quarter 2022 and decreased hedge gains realized in 2023 compared to 2022 associated with our trading derivatives.

Non-Operating Expenses, Net

Interest Expense, Net

Interest expense, net increased by $36.8 million, or 84.4%, to $80.4 million in the second quarter of 2023 compared to $43.6 million in the second quarter of 2022, primarily driven by the following:

• an increase in the average effective interest rate of 492 basis points in the second quarter of 2023 compared to the second quarter of 2022 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding);

• an increase in net average borrowings outstanding (including the obligations under the supply and offtake agreements which have an associated interest charge) of approximately $92.6 million in the second quarter of 2023 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the second quarter of 2022.

Interest expense, net was $156.9 million in the six months ended June 30, 2023, compared to $82.0 million for six months ended June 30, 2022, an increase of $74.9 million, or 91.3% primarily due to the following:

• an increase in the average effective interest rate of 444 basis points during the six months ended June 30, 2023 compared to the six months ended June 30, 2022 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding);

• an increase in net average borrowings outstanding (including the obligations under the supply and offtake agreements which have an associated interest charge) of approximately $283.0 million during the six months ended June 30, 2023 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the six months ended June 30, 2022.

Interest expense, net increased by $31.6 million, or 62.3%, to $82.3 million in the third quarter of 2023 compared to $50.7 million in the third quarter of 2022, primarily driven by the following:

• an increase in the average effective interest rate of 485 basis points in the third quarter of 2023 compared to the third quarter of 2022 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding);

• a decrease in net average borrowings outstanding (including the obligations under the supply and offtake agreements which have an associated interest charge) of approximately $256.8 million in the third quarter of 2023 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the third quarter of 2022.

Interest expense, net was $239.2 million in the nine months ended September 30, 2023, compared to $132.7 million for nine months ended September 30, 2022, an increase of $106.5 million, or 80.3% primarily due to the following:

• an increase in the average effective interest rate of 611 basis points during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding);

• an increase in net average borrowings outstanding (including the obligations under the supply and offtake agreements which have an associated interest charge) of approximately $350.2 million during the nine months ended September 30, 2023 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the nine months ended September 30, 2022.

Results from Equity Method Investments

We recognized income from equity method investments of $25.5 million during the second quarter of 2023, compared to $15.7 million for the second quarter of 2022, an increase of $9.8 million.

We recognized income from equity method investments of $27.0 million during the third quarter of 2023, compared to $17.8 million for the third quarter of 2022, an increase of $9.2 million.

This increase was primarily driven by the following:

• an increase in income from our asphalt terminal equity method investment due to higher volumes and resulting revenue increases;

• an increase in income from our investment in W2W Holdings LLC to $6.8 million in the second quarter of 2023 from $2.1 million in the second quarter of 2022.

We recognized income from equity method investments of $40.1 million for the six months ended June 30, 2023, compared to $26.6 million for the six months ended June 30, 2022, an increase of $13.5 million.

• an increase in income from our asphalt terminal equity method investment due to improved margins;

• an increase in income from our investment in W2W Holdings LLC to $6.9 million in the third quarter of 2023 from $1.2 million in the third quarter of 2022.

We recognized income from equity method investments of $67.1 million for the nine months ended September 30, 2023, compared to $44.4 million for the nine months ended September 30, 2022, an increase of $22.7 million.

This increase was primarily driven by the following:

• an increase in income from our asphalt terminal equity method investment due to higher volumes and resulting revenue increases;

• an increase in income from our investment in W2W Holdings LLC to $11.3 million during the six months ended June 30, 2023 from $4.2 million in the six months ended June 30, 2022.

For the second quarter of 2023, we recorded an income tax benefit of $3.8 million compared to income tax expense of $100.4 million for the second quarter of 2022, primarily driven by the following:

• a decrease in pre-tax net income of $474.3 million;

• Our effective tax rates were 71.7% and 21.4% for the three months ended June 30, 2023 and 2022, respectively, due to the impact of fixed dollar favorable permanent differences on the tax rate and changes in the second quarter estimated annual effective tax rate applied to year to date earnings.

• an increase in income from our investment in W2W Holdings LLC to $18.2 million during the nine months ended September 30, 2023 from $5.4 million in the nine months ended September 30, 2022.

For the third quarter of 2023, we recorded income tax expense of $31.5 million compared to $4.0 million for the third quarter of 2022, primarily driven by the following:

• an increase in pre-tax net income of $146.8 million;

Management's Discussion and Analysis

For the six months ended June 30, 2023, we recorded income tax expense of $12.0 million compared to $103.5 million for the six months ended June 30, 2022, primarily driven by the following:

• Our effective tax rates were 18.8% and 19.2% for the three months ended September 30, 2023 and 2022, respectively, due to the impact of fixed dollar permanent differences on the tax rate and changes to valuation allowances on state attributes.

For the nine months ended September 30, 2023, we recorded income tax expense of $43.5 million compared to $107.5 million for the nine months ended September 30, 2022, primarily driven by the following:

• a decrease in pre-tax net income of $257.4 million, and

• Our effective tax rates were 14.5% and 21.3% for the six months ended June 30, 2023 and 2022, respectively, due to the impact of fixed dollar favorable permanent differences on the tax rate.

• Our effective tax rates were 17.4% and 21.2% for the nine months ended September 30, 2023 and 2022, respectively, due to the impact of fixed dollar favorable permanent differences on the tax rate.

Management's Discussion and Analysis

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Selected Refining Financial Information

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

30 unchanged sentences

For this reason, unfavorable Gulf Coast (Henry Hub) differentials can impact our crack spread capture.

The cost to acquire the refined fuel products we sell to our wholesale customers in our logistics segment and at our convenience stores in our retail segment largely depends on numerous factors beyond our control, including the supply of, and demand for, crude oil, gasoline and other refined petroleum products which, in turn, depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and government regulation.

Management's Discussion and Analysis

refined petroleum products which, in turn, depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and government regulation.

In addition to the above, it continues to be a strategic and operational objective to manage price and supply risk related to crude oil that is used in refinery production, and to develop strategic sourcing relationships.

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Refinery Statistics

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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Refinery Statistics (continued)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

39 unchanged sentences

Refinery Statistics (continued)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

50 unchanged sentences

Management's Discussion and Analysis

Included in the refinery statistics above are the following inter-refinery and sales to other segments:

Inter-refinery Sales

Three Months Ended June 30, Six Months Ended June 30,

(in barrels per day) 2023 2022 2023 2022

El Dorado refined product sales to other Delek refineries — 1,531 — 1,201

Big Spring refined product sales to other Delek refineries — 470 — 554

Krotz Springs refined product sales to other Delek refineries — 1,061 — 783

Included in the refinery statistics above are the following sales to other segments:

Refinery Sales to Other Segments

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in barrels per day) 2023 2022 2023 2022

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Pricing Statistics (average for the period presented)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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Management's Discussion and Analysis

Refining Segment Operational Comparison of the Three and Six Months Ended June 30, 2023 versus the Three and Six Months Ended June 30, 2022.

Net revenues for the refining segment decreased by $1,822.4 million, or 31.0%, in the second quarter of 2023 compared to the second quarter of 2022.

Refining Segment Operational Comparison of the Three and Nine Months Ended September 30, 2023 versus the Three and Nine Months Ended September 30, 2022

Net revenues for the refining segment decreased by $542.9 million, or 10.5%, in the third quarter of 2023 compared to the third quarter of 2022.

The decrease was primarily driven by the following:

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• a decrease in wholesale activity.

Net revenues included sales to our retail segment of $111.5 million and $160.1 million, sales to our logistics segment of $92.0 million and $143.9 million, and sales to our other segment of $0.0 million and $8.3 million for the three months ended June 30, 2023 and June 30, 2022, respectively.

These decreases were partially offset by the following:

• an increase in sales volumes (including purchased products).

Net revenues included sales to our retail segment of $117.0 million and $132.1 million, sales to our logistics segment of $115.1 million and $124.7 million, and sales to our other segment of $0.0 million and $6.1 million for the three months ended September 30, 2023 and September 30, 2022, respectively.

We eliminate this intercompany revenue in consolidation.

Revenues for the refining segment decreased $2,420.2 million, or 23.6%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

Revenues for the refining segment decreased $2,963.1 million, or 19.2%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

The decrease was primarily driven by the following:

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Gulf Coast gasoline of 16.4%, ULSD of 21.5%, and HSD of 39.6%;

• a decrease in total sales volumes primarily driven by turnaround activities at the Tyler refinery in the first quarter 2023;

• a decrease in wholesale activity.

Revenues included sales to our retail segment of $214.1 million and $271.9 million, sales to our logistics segment of $183.1 million and $249.8 million and sales to the other segment of $0.0 million and $16.4 million for the six months ended June 30, 2023 and 2022, respectively.

These decreases were partially offset by the following:

• an increase in sales volumes (including purchased products).

Revenues included sales to our retail segment of $331.0 million and $404.0 million, sales to our logistics segment of $298.3 million and $374.5 million and sales to the other segment of $0.0 million and $22.5 million for the nine months ended September 30, 2023 and 2022, respectively.

We eliminate this intercompany revenue in consolidation.

Cost of Materials and Other

Cost of materials and other decreased by $1,313.2 million, or 25.8%, in the second quarter of 2023 compared to the second quarter of 2022.

Cost of materials and other decreased by $745.9 million, or 15.2%, in the third quarter of 2023 compared to the third quarter of 2022.

The decrease was primarily driven by the following:

• decreases in the cost of WTI Cushing crude oil, from an average of $91.63 per barrel to an average of $82.51, or 10.0%, and decreases in the cost of WTI Midland crude oil, from an average of $93.41 per barrel to an average of $83.85, or 10.2%;

• favorable inventory impacts;

• a decrease in wholesale activity.

Cost of materials and other decreased $2,044.6 million, or 22.0%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

These decreases were partially offset by the following:

• an increase in sales volumes (including purchased products).

Management's Discussion and Analysis

Cost of materials and other decreased $2,790.5 million, or 19.7%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

This decrease was primarily driven by the following:

• decreases in the cost of WTI Cushing crude oil, from an average of $98.50 per barrel to an average of $77.37, or 21.5%, and decreases in the cost of WTI Midland crude oil, from an average of $99.87 per barrel to an average of $78.63, or 21.3%;

• a decrease in sales volumes;

• a decrease in wholesale activity.

Management's Discussion and Analysis

These decreases were partially offset by the following:

• an increase in sales volumes (including purchased products).

Our refining segment purchases finished product from our logistics segment and has multiple service agreements with our logistics segment which, among other things, require the refining segment to pay terminalling and storage fees based on the throughput volume of crude and finished product in the logistics segment pipelines and the volume of crude and finished product stored in the logistics segment storage tanks, subject to minimum volume commitments.

These costs and fees were $132.6 million and $123.8 million during the three months ended June 30, 2023 and 2022, respectively.

These costs and fees were $257.2 million and $247.2 million during the six months ended June 30, 2023 and 2022, respectively.

These costs and fees were $156.0 million and $126.1 million during the three months ended September 30, 2023 and 2022, respectively.

These costs and fees were $413.2 million and $373.3 million during the nine months ended September 30, 2023 and 2022, respectively.

We eliminate these intercompany fees in consolidation.

Refining Margin

Refining segment margin decreased by $509.2 million, or 65.4%, in the second quarter of 2023 compared to the second quarter of 2022, with a refining margin percentage of 6.6% as compared to 13.2% for the second quarter of 2023 and 2022, respectively, primarily driven by the following:

• a 42.0% decrease in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery), a 40.1% decrease in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery), and a 68.8% decrease in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery);

• a decrease in utilization.

Refining margin decreased by $375.6 million, or 38.3%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022, with a refining margin percentage of 7.7% as compared to 9.5% for the six months ended June 30, 2023 and 2022, respectively, primarily driven by the following:

• a 14.0% decrease in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery), a 13.0% decrease in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery) and a 43.0% decrease in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery);

• a decrease in total sales volumes primarily driven by turnaround activities at the Tyler refinery in the first quarter of 2023.

Refining segment margin increased by $203.0 million, or 80.0%, in the third quarter of 2023 compared to the third quarter of 2022, with a refining margin percentage of 9.9% as compared to 4.9% for the third quarter of 2023 and 2022, respectively, primarily driven by the following:

• an increase in sales volume (including purchased products);

• an increase in utilization;

• favorable inventory impacts;

• lower natural gas prices;

• a 3.7% decrease in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery), a 0.1% increase in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery), and a 24.0% decrease in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery).

Refining margin decreased by $172.6 million, or 14.0%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, with a refining margin percentage of 8.5% as compared to 8.0% for the nine months ended September 30, 2023 and 2022, respectively, primarily driven by the following:

• a 10.6% decrease in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery), an 8.8% decrease in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery) and a 36.8% decrease in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery);

• lower natural gas prices;

• an increase in sales volume (including purchased products).

Management's Discussion and Analysis

Operating Expenses

Operating expenses decreased by $15.6 million, or 9.2%, in the second quarter of 2023 compared to the second quarter of 2022.

Operating expenses decreased by $8.9 million, or 5.1%, in the third quarter of 2023 compared to the third quarter of 2022.

The decrease in operating expenses was primarily driven by the following:

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• increase in outside service and maintenance costs including costs related to our Safety Action Plan, which we expect will continue at least through the end of 2023.

Operating expenses increased $0.8 million, or 0.3%, in the six months ended June 30, 2023, compared to six months ended June 30, 2022.

The increase in operating expenses was primarily driven by the following:

Operating expenses decreased by $8.1 million, or 1.7%, in the nine months ended September 30, 2023, compared to nine months ended September 30, 2022.

The decrease in operating expenses was primarily driven by the following:

• lower natural gas in 2023.

These decreases were partially offset by the following:

• higher employee, outside service and maintenance costs including costs related to our Safety Action Plan, which we expect will continue at least through the end of 2023.

These increases were partially offset by the following:

• lower natural gas prices in 2023.

EBITDA decreased by $477.4 million, for the three months ended June 30, 2023 compared to the three months ended June 30, 2022, primarily due to a decrease in refining margin driven by decreased crack spreads, partially offset by lower natural gas prices.

EBITDA decreased by $365.3 million, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily due to a decrease in refining margin driven by decreased crack spreads and decreased sales volume, partially offset by lower natural gas prices.

EBITDA increased by $194.8 million, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022, primarily due to an increase in refining margin driven by increased sales volume (including purchased products) and lower natural gas prices, partially offset by decreased crack spreads.

EBITDA decreased by $170.5 million, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily due to a decrease in refining margin driven by decreased crack spreads, partially offset by increased sales volume (including purchased products) and lower natural gas prices.

Management's Discussion and Analysis

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Selected Logistics Financial and Operating Information

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

28 unchanged sentences

(1) Formerly known as the Permian Gathering System.

Excludes volumes that are being temporarily transported via trucks while connectors are under construction.

(2) Formally known as 3 Bear, which was acquired June 1, 2022.

15 unchanged sentences

Management's Discussion and Analysis

Logistics Segment Operational Comparison of the Three and Six Months Ended June 30, 2023 versus the Three and Six Months Ended June 30, 2022.

Net revenues decreased by $19.8 million, or 7.4%, in the second quarter of 2023 compared to the second quarter of 2022, primarily driven by:

• decreased revenue of $50.9 million in our West Texas marketing operations primarily driven by decreases in the average sales prices per gallon and the average volumes sold:

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.93 per gallon and $1.53 per gallon, respectively;

◦ the average volumes of gasoline and diesel sold decreased by 0.6 million and 1.5 million gallons, respectively.

• partially offset by an increase in revenue as a result of our Delaware Gathering operations, which began in June 2022.

Net revenues included sales to our refining segment of $132.6 million and $123.8 million for the three months ended June 30, 2023 and June 30, 2022, respectively.

Logistics Segment Operational Comparison of the Three and Nine Months Ended September 30, 2023 versus the Three and Nine Months Ended September 30, 2022

Net revenues decreased by $18.2 million, or 6.2%, in the third quarter of 2023 compared to the third quarter of 2022, primarily driven by:

• decrease in revenue in our Delaware Gathering operations of $17.2 million primarily due to decrease in natural gas prices slightly offset by increases in water, crude oil and natural gas volumes;

• decreased revenue of $3.6 million in our West Texas marketing operations primarily driven by a decrease in the average sales prices per gallon of diesel, partially offset by an increase in the volumes sold:

◦ the average sales prices per gallon of diesel sold decreased by $0.56 per gallon;

◦ the volumes of gasoline increased by 5.3 million, partially offset by a decrease of 1.2 million gallons of diesel sold.

These decreases were partially offset by the following:

• increase in throughput associated with Midland Gathering operations primarily due to new connections finalized during 2022;

• increase in terminalling and marketing revenue primarily due to utilization and rate increases.

Net revenues included sales to our refining segment of $156.0 million and $126.1 million for the three months ended September 30, 2023 and September 30, 2022, respectively, and sales to our other segment of $0.4 million and $1.1 million for the three months September 30, 2023 and 2022, respectively.

We eliminate this intercompany revenue in consolidation.

Revenues increased by $17.1 million, or 3.6%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily driven by the following:

• increase in revenue as a result of our Delaware Gathering operations, which began in June 2022;

• increase in volumes associated with Midland Gathering operations due to new connections finalized during 2022;

• partially offset by decreased revenue in our West Texas marketing operations primarily driven by decreases in the average sales prices per gallon and the average volumes of gasoline and diesel sold in our West Texas marketing operations:

Net revenues decreased by $1.1 million, or 0.1%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 primarily driven by the following:

• decreased revenue of $66.7 million in our West Texas marketing operations primarily driven by decreases in the average sales prices per gallon and the average volumes of diesel sold in our West Texas marketing operations:

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.39 per gallon and $0.71 per gallon, respectively;

◦ the average volumes of gasoline and diesel sold decreased by 3.4 million gallons and 2.4 million gallons, respectively.

Revenues included sales to our refining segment of $257.2 million and $247.2 million for the six months ended June 30, 2023 and 2022, respectively, and sales to our other segment of $0.8 million and $0.9 million for the six months ended June 30, 2023 and 2022, respectively.

◦ the volumes of diesel sold decreased by 3.6 million gallons, partially offset by a 1.9 million increase in gallons of gasoline sold.

These decreases were partially offset by the following:

• increase in revenue as a result of our Delaware Gathering operations, which began in June 2022;

• increase in volumes associated with Midland Gathering operations primarily due to new connections finalized during 2022.

Revenues included sales to our refining segment of $413.2 million and $373.3 million for the nine months ended September 30, 2023 and 2022, respectively, and sales to our other segment of $1.2 million and $2.0 million for the nine months ended September 30, 2023 and 2022, respectively.

We eliminate this intercompany revenue in consolidation.

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Cost of Materials and Other

Cost of materials and other for the logistics segment decreased by $48.3 million, or 27.4%, in the second quarter of 2023 compared to the second quarter of 2022.

Cost of materials and other for the logistics segment decreased by $27.1 million, or 15.3%, in the third quarter of 2023 compared to the third quarter of 2022.

The decrease was primarily driven by the following:

• decrease in costs of materials and other in our West Texas marketing operations primarily driven by decreases in the average cost per gallon and the average volumes of gasoline and diesel sold:

• decrease of $16.9 million primarily as a result of a decrease in natural gas prices impacting our Delaware Gathering operations;

• decrease in costs of materials and other in our West Texas marketing operations primarily driven by decreases in the average cost per gallon, partially offset by an increase in the gasoline volumes sold:

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.41 per gallon and $0.52 per gallon, respectively;

◦ the average volumes of gallons and diesel sold decreased by 0.6 million and 1.5 million gallons, respectively.

• partially offset by increase in costs of materials and other as a result of our Delaware Gathering operations, which began in June 2022.

Our logistics segment purchased product from our refining segment of $92.0 million and $143.9 million for the three months ended June 30, 2023 and June 30, 2022, respectively.

◦ the average volumes of gasoline increased by 5.3 million, partially offset by a decrease of 1.2 million gallons of diesel sold.

Our logistics segment purchased product from our refining segment of $115.1 million and $124.7 million for the three months ended September 30, 2023 and September 30, 2022, respectively.

We eliminate these intercompany costs in consolidation.

Cost of materials and other for the logistics segment decreased by $48.4 million, or 16.0%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

Cost of materials and other for the logistics segment decreased by $75.5 million, or 15.7%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

This decrease was primarily driven by the following:

• decrease in costs of materials and other in our West Texas marketing operations primarily driven by decreases in the average cost per gallon and the average volumes of gasoline and diesel sold in our West Texas marketing operations:

• decrease in costs of materials and other in our West Texas marketing operations primarily driven by decreases in the average cost per gallon and the average volumes of diesel sold in our West Texas marketing operations:

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.55 per gallon and $0.74 per gallon, respectively;

◦ the average volumes of gasoline and diesel sold decreased by 3.4 million gallons and 2.4 million gallons, respectively.

◦ the volumes of diesel sold decreased by 3.6 million gallons, partially offset by a 1.9 million increase in gallons of gasoline sold.

• partially offset by increase in cost of materials and other as a result of our Delaware Gathering operations, which began in June 2022.

Our logistics segment purchased product from our refining segment of $183.1 million and $249.8 million for the six months ended June 30, 2023 and 2022, respectively.

Our logistics segment purchased product from our refining segment of $298.3 million and $374.5 million for the nine months ended September 30, 2023 and 2022, respectively.

We eliminate these intercompany costs in consolidation.

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Operating Expenses

Operating expenses increased by $8.0 million, or 38.1%, in the second quarter of 2023 compared to the second quarter of 2022, driven by incremental expenses associated with Delaware Gathering Acquisition

Operating expenses increased by $14.6 million, or 37.3%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by incremental expenses associated with Delaware Gathering Acquisition.

EBITDA increased by $28.3 million, or 45.2%, in the three months ended June 30, 2023 compared to the three months ended June 30, 2022, primarily driven by the following:

Operating expenses increased by $7.1 million, or 27.4%, in the third quarter of 2023 compared to the third quarter of 2022, driven by an increase in variable expenses due to higher throughput.

Operating expenses increased by $21.7 million, or 33.4%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by incremental expenses associated with Delaware Gathering Acquisition.

EBITDA increased by $9.2 million, or 10.5%, in the three months ended September 30, 2023 compared to the three months ended September 30, 2022, primarily driven by the following:

• higher throughput volumes;

• incremental EBITDA from the Delaware Gathering Acquisition.

EBITDA increased by $55.5 million, or 43.8%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by the following:

• rate increases..

EBITDA increased by $64.7 million, or 30.2%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• higher throughput volumes;

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Selected Retail Financial and Operating Information

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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Operating Information

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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Same-Store Comparison (2)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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Management's Discussion and Analysis

Retail Segment Operational Comparison of the Three and Six Months Ended June 30, 2023 versus the Three and Six Months Ended June 30, 2022.

Net revenues for the retail segment decreased by $44.4 million, or 16.0%, in the second quarter of 2023 compared to the second quarter of 2022, primarily driven by the following:

• a decrease in total fuel sales which were $148.4 million in the second quarter of 2023 compared to $193.6 million in the second quarter of 2022, primarily attributable to a decrease of $1.06 in average price charged per gallon sold.

These decreases were partially offset by the following:

• an increase in merchandise sales to $84.3 million in the second quarter of 2023 compared to $83.4 million in the second quarter of 2022, primarily driven by the same-store sales increase of 0.1%.

Revenues for the retail segment decreased by $48.9 million, or 10.0%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by the following:

• a decrease in total fuel sales which were $279.5 million for the six months ended June 30, 2023 compared to $333.5 million for the six months ended June 30, 2022, primarily attributable to a $0.69 decrease in average price charged per gallon sold.

Retail Segment Operational Comparison of the Three and Nine Months Ended September 30, 2023 versus the Three and Nine Months Ended September 30, 2022

Net revenues for the retail segment decreased by $16.6 million, or 6.6%, in the third quarter of 2023 compared to the third quarter of 2022, primarily driven by the following:

• a decrease in total fuel sales which were $153.0 million in the third quarter of 2023 compared to $169.0 million in the third quarter of 2022, primarily attributable to a decrease of $0.24 in average price charged per gallon sold;

• a decrease in merchandise sales to $83.5 million in the third quarter of 2023 compared to $84.2 million in the third quarter of 2022, primarily driven by the same-store sales decrease of 1.9%.

Revenues for the retail segment decreased by $65.5 million, or 8.9%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• a decrease in total fuel sales which were $432.5 million for the nine months ended September 30, 2023 compared to $502.4 million for the nine months ended September 30, 2022, primarily attributable to a $0.53 decrease in average price charged per gallon sold.

These decreases were partially offset by the following:

• an increase in merchandise sales to $158.2 million for the six months ended June 30, 2023 compared to $153.1 million for the six months ended June 30, 2022, primarily driven by the same-store sales increase of 2.4%.

• an increase in merchandise sales to $241.7 million for the nine months ended September 30, 2023 compared to $237.3 million for the nine months ended September 30, 2022, primarily driven by the same-store sales increase of 1.1%.

Management's Discussion and Analysis

Cost of Materials and Other

Cost of materials and other for the retail segment decreased by $45.3 million, or 19.4%, in the second quarter of 2023 compared to the second quarter of 2022, primarily driven by the following:

• a decrease in average cost per gallon of $1.07, or 26.9%, applied to fuel sales volumes that increased period over period.

Our retail segment purchased finished product from our refining segment of $111.5 million and $160.1 million for the three months ended June 30, 2023 and June 30, 2022, respectively, which is eliminated in consolidation.

Cost of materials and other for the retail segment decreased by $48.3 million, or 11.9%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by the following:

Cost of materials and other for the retail segment decreased by $20.7 million, or 9.8%, in the third quarter of 2023 compared to the third quarter of 2022, primarily driven by the following:

• a decrease in average cost per gallon of $0.31, or 9.0%, applied to fuel sales volumes that decreased period over period.

Our retail segment purchased finished product from our refining segment of $117.0 million and $132.1 million for the three months ended September 30, 2023 and September 30, 2022, respectively, which is eliminated in consolidation.

Cost of materials and other for the retail segment decreased by $69.0 million, or 11.2%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• a decrease in average cost per gallon of $0.55, or 15.4%.

Our retail segment purchased finished product from our refining segment of $214.1 million and $271.9 million for the six months ended June 30, 2023 and 2022, respectively.

Our retail segment purchased finished product from our refining segment of $331.0 million and $404.0 million for the nine months ended September 30, 2023 and 2022, respectively.

We eliminate this intercompany cost in consolidation.

Operating Expenses

Retail segment operating expenses increased by $0.8 million, or 3.2%, in the second quarter of 2023 compared to the second quarter of 2022, primarily due to driven by higher employee cost in 2023.

Operating expenses for the retail segment increased by $2.7 million, or 5.6%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily driven by higher employee cost in 2023.

EBITDA for the retail segment increased by $2.5 million, or 20.0%, for the three months ended June 30, 2023 compared to the three months ended June 30, 2022, primarily driven by the following:

• an increase in average fuel margin of $0.013 per gallon and an increase in fuel sales volume;

• a 1.0% increase in merchandise sales, partially offset by a decrease in merchandise margin percentage of 0.1%.

EBITDA for the retail segment decreased by $1.4 million, or 6.1%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by the following:

• a decrease in average fuel margin of $0.015 per gallon, partially offset by an increase in fuel sales volume;

Retail segment operating expenses increased by $1.0 million, or 3.9%, in the third quarter of 2023 compared to the third quarter of 2022, primarily due to driven by higher employee cost in 2023.

Operating expenses for the retail segment increased by $3.7 million, or 5.1%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 primarily driven by higher employee cost in 2023.

EBITDA for the retail segment increased by $2.7 million, or 20.0%, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022, primarily driven by the following:

• an increase in average fuel margin of $0.075 per gallon, partially offset by a decrease in fuel sales volume;

• an increase in merchandise margin percentage of 1.8%, partially offset by a 0.9% decrease in merchandise sales.

EBITDA for the retail segment increased by $1.3 million, or 3.6%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• an increase in average fuel margin of $0.015 per gallon, partially offset by a decrease in fuel sales volume;

• a 1.8% increase in merchandise sales.

These increases were partially offset by the following:

• an increase in operating expenses due to higher employee costs.

Management's Discussion and Analysis

Liquidity and Capital Resources

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• potential issuances of additional equity and debt securities.

At June 30, 2023 our total liquidity amounted to $1.6 billion comprised primarily of $787.5 million in unused credit commitments under our revolving credit facilities (as discussed in Note 9 of our condensed consolidated financial statements in Item 1.

At September 30, 2023 our total liquidity amounted to $1.8 billion comprised primarily of $906.9 million in unused credit commitments under our revolving credit facilities (as discussed in Note 9 of our condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q) and $901.7 million in cash and cash equivalents.

Historically, we have generated adequate cash from operations to fund ongoing working capital requirements, pay quarterly cash dividends and fund operational capital expenditures.

On August 4, 2023, our Board of Directors approved a quarterly cash dividend of $0.235 per share of our common stock.

On November 1, 2023, our Board of Directors approved a quarterly cash dividend of $0.24 per share of our common stock.

Other funding sources including borrowings under existing credit agreements, and issuance of equity and debt securities have been utilized to meet our funding requirements and support our growth capital projects and acquisitions.

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Additionally, our ability to satisfy working capital requirements, to service our debt obligations, to fund planned capital expenditures, or to pay dividends will depend upon future operating performance, which will be affected by prevailing economic conditions in the oil industry and other financial and business factors, including oil prices, some of which are beyond our control.

As of June 30, 2023, we believe we were in compliance with all of our debt maintenance covenants, where the most significant long-term obligation subject to such covenants was the Delek Term Loan Credit Facility (see further discussion in Note 9 of our condensed consolidated financial statements in Item 1.

As of September 30, 2023, we believe we were in compliance with all of our debt maintenance covenants, where the most significant long-term obligation subject to such covenants was the Delek Term Loan Credit Facility (see further discussion in Note 9 of our condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q).

Additionally, we were in compliance with incurrence covenants to the extent triggered during the quarter ended June 30, 2023.

Additionally, we were in compliance with incurrence covenants to the extent triggered during the quarter ended September 30, 2023.

Failure to meet the incurrence covenants could impose certain incremental restrictions on our ability to incur new debt and also may limit whether and the extent to which we may pay dividends, as well as impose additional restrictions on our ability to repurchase our stock, make new investments and incur new liens (among others).

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The following table sets forth a summary of our consolidated cash flows (in millions):

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flow Data:

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Financing activities (523.8) 401.1

Net (decrease) increase $ (19.7) $ 388.1

Net increase $ 60.4 $ 297.3

Cash Flows from Operating Activities

Net cash provided by operating activities was $490.2 million for the six months ended June 30, 2023, compared to $585.9 million for the comparable period of 2022.

Decreases were a result of an increase in cash paid for debt interest of $84.5 million, partially offset by an increase in dividends received of $5.0 million.

Additionally, cash receipts from customers and cash payments to suppliers and for salaries increased resulting in a net $18.8 million increase in cash provided by operating activities.

Net cash provided by operating activities was $922.8 million for the nine months ended September 30, 2023, compared to $716.1 million for the comparable period of 2022.

Increases were a result of cash receipts from customers and cash payments to suppliers and for salaries resulting in a net $297.8 million increase in cash provided by operating activities and an increase in dividends received of $9.5 million, partially offset by an increase in cash paid for debt interest of $118.8 million.

Management's Discussion and Analysis

Cash Flows from Investing Activities

Net cash used in investing activities was $279.9 million for the six months ended June 30, 2023, compared to $720.9 million in the comparable period of 2022.

The decrease in cash flows used in investing activities was primarily due to the $621.7 million Delaware Gathering Acquisition in 2022 and a $5.6 million increase in distributions from equity method investments, partially offset by a $179.5 million increase in purchases of property, plant and equipment, substantially driven by maintenance projects associated with the Tyler turnaround, other refinery additions and various interconnects associated with Logistics assets and payments of $9.0 million for equity interests investments.

Net cash used in investing activities was $338.6 million for the nine months ended September 30, 2023, compared to $819.9 million in the comparable period of 2022.

The decrease in cash flows used in investing activities was primarily due to the $625.4 million Delaware Gathering Acquisition in 2022 and a $8.8 million increase in distributions from equity method investments, partially offset by a $145.5 million increase in purchases of property, plant and equipment, substantially driven by maintenance projects associated with the Tyler turnaround, other refinery additions and various interconnects associated with Delek Logistics assets, and payments of $11.0 million for equity interests investments.

Cash Flows from Financing Activities

Net cash used in financing activities was $230.0 million for the six months ended June 30, 2023, compared to cash provided of $523.1 million in the comparable 2022 period.

The decrease in cash provided was primarily due to net payments on long-term revolvers and term debt of $248.0 million during the six months ended June 30, 2023, compared to net proceeds of $595.5 million in the comparable 2022 period, dividend payments of $29.7 million made during the six months ended June 30, 2023 and proceeds received of $16.4 million in the comparable 2022 period for the sale of Delek Logistics common limited partner units.

These decreases in cash flows were partially offset by a decrease in share repurchases of $23.6 million, combined with the impact of the following:

net proceeds from product financing arrangements of $52.8 million for the six months ended June 30, 2023 compared to net payments $2.8 million in the comparable 2022 period, and the receipt of settlement proceeds of $58.0 million during the first quarter of 2023 associated with the termination of the J.

Aron Supply & Offtake Agreements and origination of the Citi Inventory Intermediation Agreement.

Net cash used in financing activities was $523.8 million for the nine months ended September 30, 2023, compared to cash provided of $401.1 million in the comparable 2022 period.

The decrease in cash provided was primarily due to net payments on long-term revolvers and term debt of $423.7 million during the nine months ended September 30, 2023, compared to net proceeds of $509.3 million in the comparable 2022 period, net payments from product financing arrangements of $14.4 million for the nine months ended September 30, 2023 compared to net proceeds of $40.0 million in the comparable 2022 period, an increase in dividend payments of $16.6 million and proceeds received of $16.4 million in the comparable 2022 period for the sale of Delek Logistics common limited partner units.

These decreases in cash flows were partially offset by a decrease in share repurchases of $38.6 million and the receipt of settlement proceeds of $58.0 million during the first quarter of 2023 associated with the termination of the J.

Aron Supply & Offtake Agreements and origination of the Citi Inventory Intermediation Agreement (as defined in Note 8 of the condensed consolidated financial statements in Item 1.

Financial Statements).

Cash Position and Indebtedness

As of June 30, 2023, our total cash and cash equivalents were $821.6 million and we had total long-term indebtedness of approximately $2,810.9 million.

As of September 30, 2023, our total cash and cash equivalents were $901.7 million and we had total long-term indebtedness of approximately $2,638.0 million.

The total long-term indebtedness is net of deferred financing costs and debt discount of $60.1 million.

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Total unused credit commitments or borrowing base availability, as applicable, under our revolving credit facilities was approximately $906.9 million.

The decrease of $246.7 million in total long-term indebtedness as of June 30, 2023 compared to December 31, 2022 resulted primarily from a decrease in net borrowings under the Delek Revolving Credit Facility and the United Community Bank Revolver, partially offset by an increase in net borrowings under the Delek Logistics Revolving Facility.

As of June 30, 2023, our total long-term indebtedness (as defined in Note 9 of the condensed consolidated financial statements in Item 1.

The decrease of $422.4 million in total long-term indebtedness as of September 30, 2023 compared to December 31, 2022 resulted primarily from a decrease in net borrowings under the Delek Revolving Credit Facility and the United Community Bank Revolver, partially offset by an increase in net borrowings under the Delek Logistics Revolving Facility.

As of September 30, 2023, our total long-term indebtedness (as defined in Note 9 of the condensed consolidated financial statements in Item 1.

Financial Statements) consisted of the following:

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• aggregate principal of $942.9 million under the Delek Term Loan Credit Facility (maturity of November 19, 2029 and effective interest of 10.16%);

• aggregate principal of $811.0 million under the Delek Logistics Revolving Facility, (maturity of October 13, 2027 and average borrowing rate of 7.95%);

• aggregate principal of $292.5 million under the Delek Logistics Term Loan Facility (maturity of October 13, 2024 and average borrowing rate of 8.41%);

• aggregate principal of $811.2 million under the Delek Logistics Revolving Facility, (maturity of October 13, 2027 (which will accelerate to 180 days prior to the stated maturity date of the Delek Logistics 2025 Notes if any of the Delek Logistics 2025 Notes remain outstanding on that date) and average borrowing rate of 8.45%);

• aggregate principal of $288.7 million under the Delek Logistics Term Loan Facility (maturity of April 15, 2025 (which will accelerate to 180 days prior to the stated maturity date of the Delek Logistics 2025 Notes if any of the Delek Logistics 2025 Notes remain outstanding on that date) and average borrowing rate of 8.92%);

• aggregate principal of $250.0 million under the Delek Logistics 2025 Notes (due in 2025, with effective interest rate of 7.18%);

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• aggregate principal of $5.0 million under the United Community Bank Revolver (maturity of June 30, 2024 and average borrowing rate of 7.75%).

On November 6, 2023, Delek Logistics entered into a First Amendment, a Second Amendment and a Third Amendment to the Delek Logistics Credit Facility (together, the “Amendments”).

The Amendments, (i) increased the Delek Logistics Revolving Credit Facility's Revolving Credit Commitments (as defined in the Delek Logistics Credit Facility) by an amount equal to $150.0 million to provide for an aggregate Revolving Credit Commitments amount of $1.050 billion, (ii) increased Delek Logistics' ability to incur certain indebtedness and (iii) extended the Delek Logistics Term Loan maturity date from October 13, 2024, to the earlier of (i) April 15, 2025, and (ii) six months prior to the earliest maturity date of any outstanding Permitted Note Indebtedness (as defined in the Delek Logistics Credit Facility).

See Note 9 to our accompanying condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q for additional information about our separate debt and credit facilities.

Management's Discussion and Analysis

Additionally, we utilize other financing arrangements to finance operating assets and/or, from time to time, to monetize other assets that may not be needed in the near term, when internal cost of capital and other criteria are met.

Such arrangements include our inventory intermediation arrangement, which finances a significant portion of our first-in, first-out inventory at the refineries and, from time to time, RINs or other non-inventory product financing liabilities.

On June 21, 2023, DKTS entered into a letter agreement to the Inventory Intermediation Agreement with Citi to temporarily increase its letter of credit issued to Citi by $100.0 million which will allow DKTS to defer payments of certain obligations under the Inventory Intermediation Agreement until July 2023.

These deferred obligations will be subject to applicable interest charges.

Our inventory intermediation obligation with Citi was $453.4 million at June 30, 2023, none of which is current.

On September 18, 2023, DKTS entered into a letter agreement to the Inventory Intermediation Agreement with Citi to temporarily increase its letter of credit issued to Citi by $180.0 million which allowed DKTS to defer payments of certain obligations under the Inventory Intermediation Agreement until October 2023.

These deferred obligations were subject to applicable interest charges.

Our inventory intermediation obligation with Citi was $502.2 million at September 30, 2023, none of which was current.

See Note 8 of the accompanying condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q for additional information about our inventory intermediation agreement.

Our product financing liabilities consisted primarily of RIN financings as of June 30, 2023, and totaled $322.4 million, all of which is due in the next 12 months.

Our product financing liabilities consisted primarily of RIN financings as of September 30, 2023, and totaled $260.8 million, all of which is due in the next 12 months.

See further description of these types of arrangements in the Environmental Credits and Related Regulatory Obligations accounting policy disclosed in Note 2 to our accompanying consolidated financial statements included in Item 8.

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In determining our debt ratings, the agencies consider a number of qualitative and quantitative items including, but not limited to, commodity pricing levels, our liquidity, asset quality, reserve mix, debt levels and seniorities, cost structure, planned asset sales and production growth opportunities.

Management's Discussion and Analysis

There are no "rating triggers" in any of our contractual debt obligations that would accelerate scheduled maturities should our debt rating fall below a specified level.

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A key component of our long-term strategy is our capital expenditure program.

The following table summarizes our actual capital expenditures for the six months ended June 30, 2023, by segment, as well as planned capital expenditures for the full year 2023 by operating segment and major category (in millions):

2023 Forecast Six Months Ended June 30, 2023 Actual

The following table summarizes our actual capital expenditures for the nine months ended September 30, 2023, by segment, as well as planned capital expenditures for the full year 2023 by operating segment and major category (in millions):

Nine Months Ended September 30, 2023 Actual

Regulatory $ 9.8

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Logistics segment total 68.6

Regulatory — —

Sustaining maintenance 12.5

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Total capital spending $ 301.6

The amount of our capital expenditure budget is subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects and subject to the changes and uncertainties discussed under the 'Forward-Looking Statements' section of Item 2.

The 2023 full year capital expenditure forecast is expected to be between $380.0 million to $390.0 million.

In addition, we expect to receive estimated insurance and other proceeds of $20.0 million in 2023 that are not reflected in the full year forecast.

Management's Discussion and Analysis

The amount of our capital expenditure forecast is subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects and subject to the changes and uncertainties discussed under the 'Forward-Looking Statements' section of Item 2.

Management Discussion and Analysis, of this Quarterly Report on Form 10-Q.

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Risk Factors, of our December 31, 2022 Annual Report on Form 10-K.

Management's Discussion and Analysis

Cash Requirements

Long-Term Cash Requirements Under Contractual Obligations

Information regarding our known cash requirements under contractual obligations of the types described below as of June 30, 2023, is set forth in the following table (in millions):

Information regarding our known cash requirements under contractual obligations of the types described below as of September 30, 2023, is set forth in the following table (in millions):

Payments Due by Period

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Total $ 1,295.6 $ 1,927.6 $ 1,813.5 $ 1,359.4 $ 6,396.1

(1) Expected interest payments on debt outstanding at June 30, 2023.

Floating interest rate debt is calculated using June 30, 2023 rates.

(1) Expected interest payments on debt outstanding at September 30, 2023.

Floating interest rate debt is calculated using September 30, 2023 rates.

For additional information, see Note 9 to the condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q.

(2) Amounts reflect future estimated lease payments under operating leases having remaining non-cancelable terms in excess of one year as of June 30, 2023.

(2) Amounts reflect future estimated lease payments under operating leases having remaining non-cancelable terms in excess of one year as of September 30, 2023.

(3) We have purchase commitments to secure certain quantities of crude oil, finished product and other resources used in production at both fixed and market prices.

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In line with our long-term sustainable strategy, future cash requirements will include initiatives to build on our long-term sustainable business model, ESG initiatives and sum of the parts initiatives.

Refer to the cash flow section for our operating activities spend during the six months ended June 30, 2023.

Refer to the cash flow section for our operating activities spend during the nine months ended September 30, 2023.

While many of the expenses related to the operating activities are variable in nature, some of the expenditures can be somewhat fixed in the short-term due to forward planning on our level of activity.

Refer to the 'Capital Spending' section for our capital expenditures for six months ended June 30, 2023 and our anticipated cash requirements for planned capital expenditures for the full year 2023.

Refer to the 'Capital Spending' section for our capital expenditures for nine months ended September 30, 2023 and our anticipated cash requirements for planned capital expenditures for the full year 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis